Zinger Key Points
- Mastercard's investor day showed focus on value-added services and AI, maintaining strong long-term growth.
- Analysts are cautiously optimistic, with adjusted EPS estimates for 2025 and 2026, but still view MA as a core holding.
Analysts expressed views on Mastercard Incorporated MA following its investor day event this week.
The company anticipates a compound annual growth rate (CAGR) in the mid-teens for EPS over the next three years, down from its prior expectation of low-20s growth for 2022-2024.
BMO Capital Markets analyst Rufus Hone raised the price target to $565 from $550 and reaffirmed the Outperform rating.
The analyst writes that Mastercard outlined its 2025-2027E financial targets, addressing concerns about consumer payment growth potential, commercial payment acceleration, and the sustainability of VAS growth, with its market share in VAS under 7%.
The analyst views the targets as conservative, suggesting a 2-3 percentage point deceleration in payment network revenue growth by 2027E, down from ~10% year-over year growth this year.
Hence, the analyst revised the EPS estimates downward by -2% for 2025E and -1% for 2026E, reflecting slightly higher investment spending.
Goldman Sachs analyst Will Nance says that they believe Mastercard’s message will be well-received, as the company reaffirmed its commitment to mid-teens EPS growth over time and double-digit net revenue growth.
From a stock performance perspective, the modest underperformance appears to be a result of strong year-to-date performance and the realization of some tax-related headwinds for 2025, as discussed during earnings, adds the analyst.
However, looking past these factors, the analyst continues to view Mastercard as a core holding for long-term investors, offering a compelling combination of strong competitive advantages and capital-efficient earnings growth.
The analyst revised the EPS estimates for 2025 and 2026 from $14.49 to $15.82 and $18.29 to $18.23, respectively. Also, the analyst introduced the 2027 EPS estimate of $20.91.
RBC Capital Markets analyst Daniel R. Perlin reiterated the Outperform rating with a price target of $572.
The analyst writes that Mastercard delivered a well-executed investor day, emphasizing that the secular shift in the industry still has substantial room for growth.
The company highlighted the importance of Value-Added Services (VAS) as a key differentiator, playing a pivotal role in driving its virtuous cycle, adds the analyst.
Perlin says that Mastercard also stressed that data assets are crucial in an AI-driven world and pointed out significant commercial opportunities on the horizon.
JP Morgan analyst Tien-tsin Huang maintains an Overweight rating and says that Investment Community Meeting reinforced its position as a core holding in payments, with a focus on capturing a large market through new capabilities and channels, driving transaction growth and share gains.
The medium-term outlook suggests stable premium growth and mid-teens EPS growth, adds the analyst.
The analyst writes that if execution remains strong, Mastercard is well-positioned to deliver double-digit growth with 55%+ margins.
Investors can gain exposure to the stock via iShares U.S. Financial Services ETF IYG and BlackRock Long-Term U.S. Equity ETF BELT.
Price Action: MA shares are down 0.61% at $518.72 at the last check Thursday.
Photo via Shutterstock
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